Multiple Chinese railways worth trillion RMB expect to start in 2022-2023

The promotion of infrastructure projects in various regions to stimulate domestic demand has become the main tone in the second half of 2022. The planned investment of key projects in various places in China has increased one after another. During the critical period of "Golden September and Silver October", the demand for key projects has rebounded and the shipment volume has improved. It is expected that the volume and price of aggregates will increase steadily, and the demand for aggregates may recover.

The construction of the project has entered a sprint period, and the aggregates demand are recovering steadily

According to big data statistics, in September, more than 1.5 trillion yuan of infrastructure projects started intensively. Specifically, from September 1st to September 15th, about 16 major infrastructure projects were started nationwide, with a total investment of about 208.5 billion yuan, including highways, water conservancy, municipal administration, and industrial parks. Among them, two projects have a total investment of over 20 billion yuan.

From September 16th to September 30th, about 39 major water conservancy and power, municipal, industrial park, port, and airport projects were launched nationwide, with a total investment of about 555.2 billion yuan; 22 major highway projects, about 309.4 billion yuan. There are 15 railway and rail transit projects, about 500 billion yuan. This includes a number of large projects with a total investment of more than 30 billion yuan.

Entering October, infrastructure construction presses the "fast forward button". On October 9, the Shenzhen-Jiangmen high-speed railway (hereinafter referred to as "Shenjiang High-speed Railway") officially started construction. The Shenjiang high-speed railway is an important part of the coastal passage of China's "eight vertical and eight horizontal" high-speed rail network. The main line is 116 kilometers long and the construction period is 5.5 years.

In the first eight months of this year, the National Development and Reform Commission has approved a total of 1,083 billion yuan in fixed asset investment projects, which is 1.39 times that of last year.

"Starting from October, the physical workload of infrastructure construction will increase significantly owing to the acceleration of project approval, the implementation of policy-based development financial instruments, and the acceleration of the issuance of new special bonds." Analysts at Huaxi Securities predict that infrastructure investment will increase about 13% faster throughout the year. Driven by the early release of the special debt limit next year, infrastructure investment may maintain a relatively high growth rate from the end of this year to the middle of next year.

The interviewee believed that the current high temperature weather in many places has ended, the power supply shortage and construction restrictions have been eased, and all parts of the country have ushered in an upsurge in infrastructure construction, and the construction progress has gradually accelerated. As the investment stabilization policy continues to increase, a series of major projects have been launched, and the construction of major projects will inject continuous impetus into China's economic and social development.

There is significant growth in new contracts signed by central state-owned construction enterprises

On October 13, the China Construction Announcement showed that in the first nine months of this year, the company's newly signed contracts totaled 2,726.7 billion yuan, a year-on-year increase of 11.2%. On the same day, China Chemical announced that in the first nine months, the company's cumulative new contract value reached 235.511 billion yuan, a year-on-year increase of 36.66%.

In addition, on September 15, POWERCHINA announced that the company's newly signed contracts amounted to 664.494 billion yuan in the first eight months, a year-on-year increase of 42.26%.

Abundant orders have accelerated the performance of infrastructure state-owned enterprises. Judging from the semi-annual report, in the first half of the year, the revenue and net profit attributable to the parent company of the eight major construction central enterprises achieved positive growth, and the cash flow improved significantly.

"The construction industry is expected to usher in policy-driven, continuous improvement of fundamentals and multiple development opportunities of 'construction +', and the industry is in a low valuation range, and the investment value is prominent." Analysts in the construction industry of Essence Securities believe that from the 2022 semi-annual report performance and in terms of operating conditions, orders from central enterprises in infrastructure construction and leading local infrastructure construction companies have grown rapidly, and the profitability of leading enterprises may increase to a certain extent. The annual revenue performance of the construction industry is expected to maintain rapid growth. The release of leading performance in the construction sector can be expected.

With the accelerated implementation of policy-based development financial instruments and the gradual implementation of supporting financing for relevant infrastructure projects by commercial banks, infrastructure construction will be strongly supported. "The driving effect of the steady growth of investment has been transmitted to the downstream, and the price of aggregates continues to maintain a moderate and slight recovery." As the demand for physical infrastructure projects has landed, the industry's prosperity has rebounded, and the demand for sand and gravel will usher in a pick-up.

Key projects during the "big construction" period

North Yanjiang High-speed Railway, Chongqing-Wanzhou High-speed Railway, and Chengdu-Dazhou-Wanzhou High-speed Railway in the Yangtze River Corridor; Xiongan-Xinzhou High-speed Railway and Ankang-Chongqing Section of West-Chongqing High-speed Railway, Beijing-Kunming Corridor; Xiong’an-Shangqiu High-speed Railway and Nanchang-Jiujiang High-speed Railway and Jinan-Binzhou High-speed Railway in Beijing-Hong Kong (Taiwan) Corridor; the Nnatong-Ningbo high-speed railway and the Shenzhen-Jiangmen railway in the coastal high-speed railway channel; the Xian-Chengdu railway of the Lanzhou (West)-Guangzhou channel, etc.

The construction of a large number of world-class bridges and tunnels across the river and the sea will also start in full. Its design and construction technology has achieved many world firsts and created many world records, which is a milestone for the construction of bridges and tunnels in the world.